Is the reaching of the retirement age a barrier to a reinstatement claim?

By Siphamandla Dube, Senior Associate, Fasken – Reinstatement is the primary remedy under the Labour Relations Act, 1995 and involves placing an employee back into the position they would have occupied but for their dismissal.

If the exceptions to the remedy of reinstatement do not apply, the Labour Court and arbitrators only have discretion with regard to the extent to which reinstatement should be made retrospective.[1]

Is reinstatement competent when an employee has passed the retirement age? This is the question that the Labour Court had to determine in Samuel v Old Mutual Bank and Others (2019) 40 ILJ 205 (LC).

Ms Samuel had worked for Old Mutual Bank for close to 26 years in various clerical positions until she was dismissed in 2007 for acts of misconduct. Dissatisfied with her dismissal, Ms Samuel referred a dispute to the CCMA challenging the fairness of her dismissal and sought reinstatement. The arbitration award was issued on 4 April 2011. The arbitrator found that on the overall evidence Old Mutual Bank had failed to prove on a balance of probabilities that Ms Samuel’s dismissal was fair.

Notwithstanding the finding that Ms Samuel’s dismissal was unfair, the commissioner declined to reinstate her but ordered Old Mutual Bank to pay her compensation equivalent to 12 months’ remuneration.

In reaching his finding that reinstatement was not the appropriate remedy, the commissioner based his finding on the fact that the employment relationship between Ms Samuel’s and her managers Prem Naidoo and Barney Walker was intolerable and that there were new systems in place which Ms Samuel would have to be trained on . This training would take close to six months as Ms Samuel had been away from the operations for close to four years.

Dissatisfied with the award, Ms Samuel applied to the Labour Court to review the commissioner’s decision not to grant her reinstatement. Old Mutual Bank opposed Ms Samuel’s review application on various grounds which included amongst others, the relief she sought namely reinstatement, was not competent on the basis that by time the review application was heard, she had passed the retirement age. Old Mutual Bank argued that the effect of reinstatement was that Ms Samuel would receive compensation in excess of the 12 months remuneration which is a statutory limit on compensation in terms of the Labour Relations Act.

For the purposes of this article we focus on how the Labour Court dealt with Old Mutual Bank’s argument that reinstatement was not a competent remedy since Ms Samuel had passed the retirement age.

The normal retirement age for Old Mutual Bank’s employees was 61 years of age. Ms Samuel would in the normal course of events have retired on 31 August 2012. The matter was heard by the Labour Court on 1 March 2018.

The Labour Court rejected the commissioner’s reasons for refusing to grant reinstatement for a number of reasons.

In respect of Old Mutual Bank’s argument that Ms Samuel was not entitled to reinstatement since she had reached the retirement age, the Labour Court held that at the time of her dismissal, Ms Samuel had not reached the retirement age, nor had she reached retirement age at the time the arbitration was concluded. Given that Ms Samuel was reviewing the decision not to order her reinstatement, if that decision was reviewable, it needed to be substituted with the correct decision. On this basis, the Labour Court held that to find that a reinstatement order was incompetent would simply serve to prejudice the rights of employees who are dismissed shortly before their retirement or in circumstances where a review application is delayed beyond the employee’s retirement age. The Labour Court concluded that this would certainly be unfair to employees.

The Labour Court held that it is an inherent risk faced by employers in labour litigation where a final decision is deferred while the litigation is ongoing, and it was for this reason that the Labour Relations Act specifically provided for reinstatement as a primary remedy unless the exceptions in section 193(2) are applicable. Accordingly, the Labour Court ordered that Ms Samuel be reinstated from the date of her dismissal to the date upon which she would have retired had she not been dismissed.

Furthermore, the fact that a significant period might have lapsed from the date of dismissal to the date of the judgment is not a bar to reinstatement. An employee whose dismissal is substantively unfair should not be disadvantaged by the delays of litigation where she or he has not unduly delayed in pursuing the litigation.[2]

This case highlights the inherent risk in dismissal dispute in respect of an employee’s primary remedy of reinstatement. In this case, the Labour Court confirmed that where the commissioner refuses to award reinstatement and the employee challenges the failure not to reinstate, the employer carries the risk to pay backpay to an employee in the event that the award is reviewed and set aside by the Labour Court and reinstatement is awarded. In circumstances where an employee is challenging the failure to reinstate, employers should also consider whether or not to cross-review the award to challenge the commissioner’s finding that the employee’s dismissal was unfair.